Tuesday, December 31, 2013

Bipartisan Budget Act for FY14-15 Approved in Congress

On December 18, 2013, the US House and Senate passed the Bipartisan Budget Act, a two-year budget
agreement that will undo at least some of the impending sequestration cuts, and
will prevent the government from shutting down again on January 15. As
part of the agreement, Republicans were able to say that they did not raise taxes,
and that the end result would be to reduce the deficit some more.
Democrats pointed to the fact that they prevented further cuts to programs like
Social Security, Medicaid, or SNAP/food stamps.

However, Congress refused to
include the renewal of the Emergency Unemployment Compensation (EUC) program
despite the fact that the number of people out of work for more than six months
rose in November – it was higher than in September or October. This
federally funded unemployment insurance for the long-term jobless who exhaust
their state benefits expired on December 28th. Between Christmas and New
Year’s, 1.3 million people will lose benefits, which average $260 per
week. If Congress does not act to re-start the program, another 3.6
million people will lose access to benefits by the end of 2014.

The
budget agreement also sets appropriations totals for FY 2014 (the current
fiscal year) and FY 2015. It changes the deficit reduction law by
increasing the amounts that can be spent in those two years by $63
billion. In FY 2014, the budget the House voted for will enable domestic
appropriations to be $22.4 billion more than was spent in the previous
year. That will make it possible to restore some of the lost services
caused by sequestration in FY 2013 in programs such as Head Start, rental
vouchers, meals for seniors, and many other areas.

The
sequestration cuts are not eliminated, but instead of $109
billion a year cuts to the Pentagon and domestic/international appropriations theywill be $64.6 billion in FY 2014 and $90.9 billion in FY
2015. The budget agreement does not do anything to reduce the sequester
cuts in FYs 2016 – 2021, which will revert to $109 billion a year unless
Congress takes further action. In fact, in order to pay for the modest
reduction in cuts to appropriations, the budget plan extends cuts to mandatory
programs (prominently Medicare) for two additional years.

By
setting appropriations totals at $1,012.2 billion in FY 2014 and $1,013.6
billion in FY 2015, the budget allows the House and Senate Appropriations
Committees to determine program-by-program spending levels. The appropriators will have to assemble an Omnibus spending bill (one that
combines all areas of discretionary (appropriated) spending, instead of passing
separate appropriations bills) so that it can be voted on by Congress before
January 15, when the current temporary funding measure runs out.

The
budget provides nearly $45 billion more in FY 2014 for appropriations, divided
equally between defense and domestic programs. In FY 2015, a little more
than $18 billion is added, for a total of $63 billion. The plan saves
about $85 billion through FY 2023, thereby providing another $22 billion in
deficit reduction.

In
addition, the House added a three-month suspension of a long-avoided reduction
in payment rates to physicians under Medicare, and also extended the
Transitional Medicaid program (for low-income families that leave Temporary
Assistance for Needy Families for employment), and the Qualifying Individual
(QI) program, which assists near-poor people who qualify for Medicare by using
Medicaid funds to pay for their Medicare Part B premiums.